Markets regulator Sebi today imposed a penalty of Rs 28 lakh on Amrut Securities for manipulative trading in the shares of Gujarat Arth and violating sub-broker norms.
According to a Sebi order, Amrut Securities -- now known as Amrut Dredging and Shipping -- had executed reversal or circular trades for over 8.22 lakh shares of Gujarat Arth during October 20, 2003 to November 15, 2003, which accounted for 33 per cent of the market volume.
"... 87 per cent of such trades were synchronised," Sebi said.
The regulator said that Amrut Securities -- a sub-broker of Galaxy Broking -- trading on behalf of Hitesh M Thakkar executed all the circular trades with the same counterparty Ved Finance, which traded on behalf of Amit S Mehta.
"Such repeated circular/ reversal trades spread over several trading days indicate the manipulative intent behind such transactions by creating artificial volumes," Sebi added.
As per the order, during a personal hearing with Sebi in 2010, the authorised representative of Amrut Securities had agreed that it had failed to do the due diligence as prescribed under Stock Brokers and Sub-brokers Regulations, which could have led to circular trading between Thakkar and Mehta.
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The regulator said that the allegation of violation of PFUTP (Prohibition of Fraudulent and Unfair trade Practices Relating to Securities Market) Regulations and Stock Brokers and Sub-brokers Regulations "stands established".
While the regulator has imposed a penalty of Rs 16 lakh on Amrut Securities for violating of PFUTP Regulations, it has levied a fine of Rs 12 lakh for violation of code of conduct for sub-brokers.
The Securities and Exchange Board of India (Sebi) had conducted an investigation into alleged irregularity in share trading of Gujarat Arth for the period from October 6, 2003 to January 28, 2004.
Sebi's fresh ruling has come after the Securities Appellate Tribunal had set aside an earlier one of the regulator and remanded the case back to it to pass a fresh order.
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